David Cameron will today announce that his "uncompromising" clampdown on benefit fraud could result in tougher penalties for offenders and the use of third party groups such as credit ratings agencies to detect guilty parties.

He does not, however, explain whether the Department for Work and Pensions (DWP) or central government will pocket any eventual welfare savings.

Writing today in the Manchester Evening News ahead of his latest Cameron Direct roadshows in the city, the prime minister outlines plans to claw back some of the £5.2bn thought to be lost through fraud and system error, some of which may discomfit groups concerned at the power of credit ratings agencies. He also estimates that three-quarters of those caught defrauding the system are not currently prosecuted.

"We are looking urgently at different options for reform," he writes. "Tougher penalties for fraud, more prosecutions, encouraging those who know fraud is taking place to come forwards [sic] and making greater efforts to reclaim money that's wrongly paid.

"We will look at all these things and more. Including, for example, using more information from third parties such as credit referencing agencies to identify circumstances which are incompatible with the benefit claim."

Cameron has asked his work and pensions secretary, Iain Duncan Smith, to draw up a "tough and uncompromising" strategy to be launched in the autumn. But while Duncan Smith shares the prime minister's desire for a clampdown, central government and the DWP have different aspirations for the money saved.

Ministers are engaged in a negotiation to keep savings, despite the coalition telling their departmental ministers they will be judged on what funds they save, not what they protect. The department is thought to want to establish a universal credit system intended to curtail all administrative errors from costly inefficiencies to other outgoings such as over-generous payments to the middle classes.

Since the new government was formed, the Treasury has maintained that the scale of cuts to other departments could be ameliorated by the savings that can be made in the large welfare budget. The government believes welfare and tax credit fraud and error cost the exchequer £5.2bn a year — a figure that Cameron claims is equivalent to "200 secondary schools or over 150,000 nurses". Statistics from the last year for which figures are available suggest that £3.1bn was lost in the benefit system to fraud and error.

Cameron breaks this down, saying: "We need to do more to stop fraud – £1.5bn of hard earned taxpayers' money is being stolen from the taxpayer. This is simply not acceptable. Nor is it right that only £20m of benefit fraud-related debts are recovered each year. Or that three in four of those caught don't get prosecuted."

He adds: "It's quite wrong that there are people in our society who will behave like this. But we will not shrug our shoulders and let them get away with it any longer. We will take the necessary measures to stop fraud happening in the first place; root out and take tough action against those found committing fraud; and make sure the stolen money is paid back."

Alongside more punitive measures for fraudsters, Cameron also rounds on administrative incompetence, which, he says costs £1.6bn a year.